NECESSITY,
FUNCTION, AND CONFORMITY: KRS 238.515(6) and 238.560(3) authorize the Department
of Charitable Gaming to take appropriate disciplinary action against persons
who do not operate in compliance with KRS Chapter 238 and the administrative
regulations promulgated thereunder. KRS 238.560(3) directs the department to
promulgate an administrative regulation to classify administrative offenses and
describe the recommended penalties and other administrative actions for those
offenses. This administrative regulation establishes the required
classifications and penalties.

Section
1. (1) The department may issue a letter of reprimand or a cease and desist
order to any license holder for any violation of KRS Chapter 238 or 820 KAR
Chapter 1.

(2)
The department shall impose this administrative action in accordance with KRS
238.560(3) if the department determines that the action will deter future
violations and promote efforts to correct the violation cited.

Section
2. The department may assess fines against any license holder in accordance
with the following schedule. All fines shall be assessed in accordance with KRS
238.560(3).

(1)
A violation of KRS Chapter 238 or 820 KAR Chapter 1 relative to charitable
gaming recordkeeping and reporting requirements, except for failure to file
quarterly reports as required in 820 KAR 1:025, shall be subject to a fine not
to exceed $500 for each offense. A second or subsequent violation of the same
statutory or regulatory provision during the same year shall be subject to a
fine not to exceed $1,000 for each offense.

(2)
A violation of KRS Chapter 238 or 820 KAR Chapter 1 relative to the conduct of
charitable games, including conducting unauthorized games, participation by
unauthorized persons, violations of rules of play for bingo, charity game
tickets, raffles, games of chance approved for charity fundraising events, and
special limited charitable games, shall be subject to a fine not to exceed $500
for each offense. A second or subsequent violation of the same statutory or
regulatory provision during the same year shall be subject to a fine not to
exceed $1,000 for each offense.

(3)
A violation of KRS Chapter 238 or 820 KAR Chapter 1 relative to manufacture,
packaging, and distribution of charitable gaming supplies and equipment shall
be subject to a fine not to exceed $500 for each offense. A second or
subsequent violation of the same statutory or regulatory provision during the
same year shall be subject to a fine not to exceed $1,000 for each offense.

(4)
A violation of the provisions of KRS 238.530(10) or 238.555(3) shall be subject
to a fine not to exceed $750 for each offense. A second or subsequent violation
during the same year shall be subject to a fine not to exceed $1,000 for each
offense.

(5)
A violation for conducting without a license any activity for which a license
is required under KRS Chapter 238 and 820 KAR Chapter 1 shall be subject to a
fine not to exceed $1,000 for each offense.

(6)
A violation for making false statements in reports or other documents submitted
to the department, including quarterly reports, license applications or records
of charitable gaming sessions and events, shall be subject to a fine not to
exceed $1,000 for each offense.

(7)
A violation of KRS Chapter 238 or 820 KAR Chapter 1 relative to diversion of
net receipts from authorized expenses or charitable purposes, unlawful
compensation to an individual involved in the conduct of charitable gaming, or
any other inurement of net receipts to the private benefit or financial gain of
an individual or person, shall be subject to a fine not to exceed $1,000 for
each offense.

(8)
A violation of KRS 238.510(5) relative to gambling offenses committed on
licensed charitable gaming premises or in conjunction with charitable gaming
shall be subject to a fine not to exceed $1,000 for each offense.

(9)
Any other violation of KRS Chapter 238 or 820 KAR Chapter 1 for which a fine is
not established in this section shall be subject to a fine not to exceed $1,000
for each offense.

Section
3. The department may impose upon any license holder a term of probation for
any violation of KRS Chapter 238 or 820 KAR Chapter 1. The department may
impose this administrative action, in accordance with KRS 238.560(3), if it
determines that department oversight and monitoring of the license holder’s
activities will promote efforts to correct the cited violation and deter future
violations.

Section
4. The department may revoke, suspend or deny a license or application for
license for any violation of KRS Chapter 238 or 820 KAR Chapter 1 under the
following circumstances:

(1)
The department shall revoke or deny a license if:

(a)
An applicant or license holder or individual associated with the applicant or
license holder in a capacity listed in KRS 238.525(3) has been convicted of a
felony, gambling offense, criminal fraud, forgery, theft, falsifying business
records, violation of KRS 238.995, or any two (2) misdemeanor crimes in federal
court or the courts of any state, the District of Columbia, or any territory,
consistent with the provisions of KRS Chapter 335B during the term of licensure;

(c)
A license holder, upon notice of delinquency, fails to remit to the department
of the charitable gaming fee required pursuant to KRS 238.570(1); and

(d)
With respect to license renewal applications, a license holder fails to fulfill
any requirement, qualification or eligibility restriction for licensure set
forth in KRS Chapter 238 or 820 KAR Chapter 1.

(2)
The department may revoke, suspend or deny the license or application of a
charitable organization, a manufacturer, a distributor or a facility for
violations of KRS Chapter 238 or 820 KAR Chapter 1 if the nature, frequency and
severity of the offenses charged, and the license holder’s or applicant’s
history of previous violations, demonstrate an unwillingness or inability to
operate in compliance with the law.

Section
5. The department shall issue a written notice of violation to a license holder
determined to have violated provisions of KRS Chapter 238 or 820 KAR Chapter 1.
This notice shall be provided on a Form CG-NOV, Notice of Violation(s). Any
Notices of Violation issued to a license holder shall be considered by the department
in evaluating the license holder’s history of previous violation. A Notice of
Violation shall state the provisions alleged to have been violated and shall
notify the license holder that the department may take administrative action
against the license holder as a result of the violations.

Section
6. A person shall submit a request, in writing, to the department to initiate
an investigation of an alleged violation.

Section
7. Incorporation by Reference. (1) Form CG-NOV, "Notice of
Violation(s)", 07/01, is incorporated by reference.